Are you in California? Please vote NO on Proposition 21
Maintaining vacancy decontrol is the most important reason to vote NO. My perspective is as someone who has been a Berkeley renter, then rental property owner, and now a Berkeley rental and home owner and real estate agent.
- “Allows rent increases in rent-controlled properties of up to 15 percent over three years at start of new tenancy (above any increase allowed by local ordinance).”
“The ballot measure would allow local governments to adopt rent control on housing units, except on (a) housing that was first occupied within the last 15 years and (b) units owned by natural persons who own no more than two housing units with separate titles, such as single-family homes, condos, and some duplexes, or subdivided interests, such as stock cooperatives and community apartment projects”
Sounds reasonable, no?
What does that mean for homeowners?
Note the carefully worded “owned by natural persons”. I’m no attorney, but recall that the Berkeley rent board
The objective of Proposition 21 is to eliminate the Costa Hawkins law which is also referred to as Vacancy Decontrol. With vacancy decontrol, once a renter vacates, the housing provider can re-rent the property at market rent. Current renters already have their rent stabilized.
But wait – doesn’t that mean that rents can rise? Yes, it does, and that’s a good thing because it gives owners the incentives to improve their rental and the quality of Berkeley’s housing stock so they can get a higher rent from a new renter.
Here’s the economics … if Prop 21 passes, I’d be only be able charge a new renter about $100 more than the current rent in two of our units. Two renters have been living there about 20 years.
The last apartment we rehabbed several years ago cost about $20,000 to rehab – and we managed the repair people ourselves to save on the costs. We did it because we wanted the unit to look great so we’d get a higher rent for it.
It would take 200 months to recover $20,000 at $100/month
That’s almost 17 years.
Would you invest $20,000 knowing that it would take 17 years just go recoup your $20,000 … not taking into account the time value of money. Few people would.
If you want to make sure that rental housing providers have the resources to improve the rental housing stock, vote NO on 21
What about current renters?
Under current rent regulations in California, some cities have rent stabilization, so any rent increases are already limited by city regulation.
Berkeley renters already have their rent stabilized.
Here are the allowable Berkeley Rent Stabilization Board Annual Increases since 2010. That’s an average of 1.6% per year.